Mauritius: Double Tax Treaties

Introduction

Mauritius has entered into a considerable number of double-tax treaties (unusually for a low-tax jurisdiction). Generally speaking, the treaty benefits are available to all Mauritian companies other than International Companies.

All of Mauritius' treaties are based on the OECD model treaty, and contain exchange of information clauses; however, the exchange is limited to matters concerning the working of the treaties themselves.

The treaty with India, which had underpinned the emergence of Mauritius as the dominant channel for FDI into India, came under attack from Indian tax authorities in 2002 as a result of alleged abuses by Indian-resident investors. After a series of high-profile court hearings, the status quo appeared to have been restored. However, rumblings from the Indian authorities with regard to the alleged 'abuses' are still continuing in 2011 and it was announced in June that discussions between the two countries to amend the treaty are to commence soon.

In October 2006, in an attempt to head off pressure from India to change the countries' Double Tax Avoidance Agreement, the Mauritian government announced that it would tighten up rules on the issuance of Tax Residence Certificates, and in future would issue them for only one year at a time.

Mauritius Minister of Finance, Rama Sithanen Mauritius said earlier that month that he was willing to co-operate with India to prevent misuse of the treaty.

"Let me state very clearly that we will collaborate to prevent any alleged misuse of the treaty," said Mr Sithanen, at a news conference on a trip to New Delhi. "But keeping in view historical, cultural, political and diplomatic ties between the two countries we need a global solution that will not penalise Mauritius."

He claimed that: "The problem of roundtripping has been eliminated completely."

In September that year, an Indian government official had said: “We are proposing to bring the DTAA with Mauritius on a par with the DTAA with Singapore. The DTAA with Singapore had included additional clauses to check round-tripping of investments.”

The new proposals were said to include a rule that only companies listed on a recognised stock exchange be eligible for capital gains tax exemption under the treaty, and that a company should have a total expenditure of USD200,000 or more on operations in the residence state (ie Mauritius) for at least two years prior to the date on which a capital gain arises. Under the treaty as it stands, there is a very basic residence requirement. These provisions would match those included in the India/Singapore treaty.

In January 2007, it emerged that talks between Indian and Mauritian officials would focus on changes to the two countries' Double Tax Avoidance Treaty.

Indian tax officials expressed the hope that Mauritius would stiffen the requirements for tax exemptions under the DTAA, and pointed to a new protocol that Mauritius had added to its treaty with China, under which capital gains arising in Mauritius on the sale of Chinese assets are subject to a 10% tax in China in some circumstances. The protocol came into force on 1st January 2007.

The Mauritian authorities had moved to placate the Indians in 2006, tightening up on the issuance of Category 1 Global Business Licence applications for Collective Investment Schemes, Private Equity Funds, Venture Capital Funds, Investment Companies, CIS Manager, and Investment Adviser/Managers; but India announced that it wanted further action before it would implement parts of the Comprehensive Economic Cooperation Partnership Agreement (CECPA) which will be highly favourable for Mauritian exports to India.

The DTAA with Indonesia, for somewhat similar reasons, was lapsed on 1st January 2005 after the Indonesian government gave notice of termination in 2004 and refused to discuss the matter. "The reasons given were that, following an assessment and evaluation of the implementation of the treaty, the Indonesian government has concluded that there was an abuse that was inflicting a loss upon Indonesia. The letter referred specifically to those foreign companies that are registered in Mauritius as Global Business Licence companies and to our domestic legislation tht enabled them to obtain tax dispensation or nullification on their business income from Indonesia," said the government.

In November 2008, a proposal by Japan Tobacco International's Mauritius operation to increase its stake in its Indian arm from 50% to 74% came under fire from several sides.

The increase was cautioned against by the Finance Ministry, which argued that allowing such a move would constitute a tacit approval of 'treaty shopping', a particular bugbear of the Indian authorities when it comes to companies routing investment via Mauritius.

In August 2009, India said that it is revising its double taxation avoidance treaties, especially those which were concluded prior to 2004. Its objective is to renegotiate anti-abuse provisions.

The following countries are among those which have double-tax treaties with Mauritius (an * indicates that the treaty is awaiting ratification):

Bangladesh

Barbados

Belgium

Botswana

China

Croatia

Cyprus

France

Germany

India

Indonesia (suspended)

Italy

Kenya*

Kuwait

Lesotho

Luxembourg

Madagascar

Malaysia

Mozambique

Namibia

Nepal

Nigeria*

Oman

Pakistan

Qatar

Singapore

Romania

Russia*

Rwanda

Senagal

Seychelles

Singapore

South Africa

Sri Lanka

Swaziland

Sweden

Thailand

Tunisia

Uganda

UAE

United Kingdom

Zambia

Zimbabwe

In 2006, a Protocol to the China-Mauritius DTAA was signed. The Protocol amended the Capital Gains and Exchange of Information Articles of the DTAA, making harder for Mauritius based companies investing in China to get a capital-gains tax exemption.

Latest Mauritius Treaty Updates

Mauritius signed a renegotiated DTA with Swaziland on November 11, 2014.

Treaty Update: Congo, Republic of the - Mauritius

11 November, 2014

According to preliminary media reports, the DTA between the Republic of the Congo and Mauritius entered into force on October 8, 2014.

Treaty Update: Mauritius - Malta

03 November, 2014

Mauritius and Malta signed a DTA on October 15, 2014.

Treaty Update: Congo, Republic of the - Mauritius

02 September, 2014

According to preliminary media reports, the Republic of Congo completed its domestic ratification procedures on August 7, 2014, in respect of the DTA signed with Mauritius.

Treaty Update: Mauritius - Rwanda

25 August, 2014

The DTA between Mauritius and Rwanda entered into force on August 4, 2014.

Treaty Update: Guernsey - Mauritius

07 July, 2014

The DTA signed between Guernsey and Mauritius on December 17, 2013, will become effective on July 27, 2014.

Treaty Update: Mauritius - Ghana

27 May, 2014

Mauritius and Ghana agreed to launch negotiations towards a DTA on May 22, 2014.

Treaty Update: Luxembourg - Mauritius

31 January, 2014

According to preliminary media reports, Luxembourg and Mauritius signed a DTA Protocol on January 28, 2014.

Treaty Update: Mauritius - United States

15 January, 2014

Mauritius and the United States signed a TIEA and an inter-governmental agreement on December 27, 2013.

Treaty Update: Rwanda - Mauritius

18 November, 2013

The new DTA signed between Rwanda and Mauritius was forwarded to Rwanda's parliament during the week ending November 10, 2013, for ratification, Rwanda's embassy in Kenya has reported.

Treaty Update: Mauritius - Zambia

09 October, 2013

Mauritius has reported successful negotiations towards a DTA with Zambia during a five-day process, which concluded on September 27, 2013. At the conclusion of the meetings, the two parties agreed to soon sign and ratify the agreed pact.

Treaty Update: Mauritius - Guernsey

26 August, 2013

Guernsey and Mauritius commenced negotiations towards a DTA during three-day meetings concluding on August 14, 2013.

Treaty Update: Gabon - Mauritius

24 July, 2013

Gabon and Mauritius signed a DTA on July 18, 2013.

Treaty Update: Guernsey - Mauritius

25 June, 2013

The TIEA Guernsey signed with Mauritius on February 6, 2013, will enter into force on July 5, 2013.

Treaty Update: Mauritius - Nigeria

23 May, 2013

Mauritius and Nigeria signed two Protocols to amend their DTA on the sidelines of the 23rd World Economic Forum on Africa, concluding on May 10, 2013.

Treaty Update: Monaco - Mauritius

18 April, 2013

Monaco and Mauritius signed a DTA during a series of meetings during the weekend ending April 14, 2013, the Mauritius Government confirmed on April 17, 2013.

Treaty Update: Mauritius - Turkey

13 February, 2013

Turkey and Mauritius agreed to open negotiations towards a DTA at a meeting on February 7, 2013.

Treaty Update: India - Mauritius

11 January, 2013

The Indian government confirmed on January 9, 2013, that officials from India and Mauritius will reconvene to negotiate amendments to Indo-Mauritius DTA in February.

Treaty Update: Mauritius - Egypt

21 December, 2012

Representatives from Egypt and Mauritius signed a DTA on December 19, 2012.

Treaty Update: Nigeria - Mauritius

15 August, 2012

Mauritius's investment promotion agency has announced that Nigeria and Mauritius signed a DTA on August 10, 2012.

Treaty Update: Mauritius - Various

15 June, 2012

The government of Mauritius on June 8, 2012, confirmed that DTA negotiations have recently been finalized with Gabon and Nigeria.

Treaty Update: Mauritius - Denmark

13 June, 2012

According to preliminary media reports, the TIEA signed between Mauritius and Denmark entered into force on June 1, 2012.

Treaty Update: Finland - Mauritius

15 May, 2012

According to preliminary media reports, on May 11, 2012, Finland's parliament ratified the pending TIEA the signed with Mauritius.

Treaty Update: Mauritius - Norway

14 May, 2012

According to preliminary media reports, the TIEA signed between Norway and Mauritius in December 2011, is to enter into force on May 18, 2012.

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